Friday, April 17, 2009

So we got about seven of the homebrew crew out for Beer Wars Live out at AMC Sunset Place in South Miami last night. All in all a pretty good time, stopped off at the Titanic before the show for dinner and, appropriately enough, mugs of Arrogant Bastard and Dogfish 90 Minute.

The entire Beer Blogosphere, such as it is, will no doubt be buzzing about this so I'll keep my thoughts short.

The Good.

It was reasonably well produced and, come on, for a movie about beer and corporate competition it was pretty darn entertaining. There were some good moments of humor interspersed throughout, usually by creative use of old advertising and industry videos. It was also fun to see various beer personalities get riled up. Greg Koch and Sam Caglione are further cemented in my Hall of Beer Heroes. The 25 or so people in the theatre seemed to be having a good time. (Yeah it sold out in Boston, but hey, 25 people who care about beer in South Miami is an incredible showing!) Also the live simulcast was great, purely because it was a bit spotty and unpolished. It made the whole thing seem more personal somehow, even though there were 400 theatres involved.

The Bad.

Ok. Anat grated on me a little bit, nothing serious but at times she's a bit like a shrill Michael Moore. That didn't bother me too much, though I'm sure many reviews will be less kind. And sometimes I felt the history behind all this was treated a bit too lightly, I'd like to have seen a bit more about the forming of the Three-Tier system after Prohibition.

But my biggest problem BY A MILE is with her premise: that we need to ditch, or at least seriously rethink, the Three-Tier system. No one doubts that there are some serious problems with the current wholesaler tier. Yes, the large breweries (and distilleries/wineries as well! This isn't just a beer problem!) have gained more control over distribution than they were ever intended to. Yes, the small number of powerful distributors often limit choice and create barriers to entry. Yes, they sometimes break the law by offering all kinds of illegal perks, such as bulk discounts, free merchandise, advertising freebies, and sometimes outright bribes. But the distributors are creatures of statute. The monopolies distributors enjoy are granted by the states under the 21st Amendment. And there are perfectly good reasons that the system was structured this way. Distributors are the choke point between retail and production, which makes monitoring all three easier for the state. Because there are relatively few distributors, and they are often geographically limited, there is little incentive to compete, meaning that there is little incentive to make alcohol dangerously cheap and plentiful. Because their licenses are expensive, and profitable, distributors are incentivized to stick to the rules. Usually they get a single warning, then their license is revoked. In practice, even a warning would make investors nervous enough to pull out, spelling danger (possibly doom) to the company.

State legislatures and LCBs could change/actually enforce the restrictions placed on the middle tier, if there was enough political will to overcome the mountain of money in the way. Hopefully this movie will help educate and inspire craft beer fans to start pressuring their legislatures to do just that.

I guess my biggest problem is that while she suggests some alternatives, she doesn't really address the reasons why we have a Three-Tier system and the problems and consequences of tinkering with it. For example, she suggests allowing self-distribution for small brewers. Ok fine, but it's not so simple. Just take a look at the current mess regarding wine shipping and self-distribution. Appart from the cost to the breweries of licensing and bonding, compliance with the complicated regulations concering distribution would take some serious effort. And it would create that much more work for TTB agents and state liquor control officers to monitor that many more distributorships.

Finally, in ignoring the problems that created the Three-Tier system she ignores the inevitability that removing the system will only cause those problems to resurface. If the tied house and antitrust problems that arose before prohibition were bad then, when there were a thousand regional breweries, none with clear market dominance, imagine what it would be like if AB In-Bev and SABMiller could start buying into retail and distribution chains now. That little sliver of grocery store shelf space devoted to craft beer would be gone forever.

I gather that some of the Fresh Beer crew (our local distributors of Shipyard, Avery, Stone, Dogfish, Rogue, etc. i.e. The Font of All that is Good and Holy) were out at South Beach Cinemas for this. I'd like to get their opinion on it, I'll see if I can.

Monday, April 13, 2009

...because Anheuser-Busch InBev is thinking of selling. Which is funny because three years ago AB bought Rolling Rock from InBev for $82 million dollars. One possible suitor is North American Breweries Inc. (a brewery holding corp crated by KPS Capital Partners), which recently purchased Labatt USA from AB following the DOJ's stipulations for the AB/InBev merger. Oddly enough, Labatt also used to own Rolling Rock.

Sunday, April 12, 2009

So yes I'm still alive, but with graduation approaching, final papers due, Bar applications, moving arrangements, etc. I've been pretty busy. Updates will probably be spotty for a couple months at least, certainly until after the Bar.

Ok so here's some legal and personal updates:

First up: I have registered to take the Washington State Bar Exam! We'll most likely be moving somewhere between Seattle and Tacoma after graduation. I cannot understate how excited we both are to be moving back to the Pacific Northwest.

Wine News

EU suspends sales of US wine using controverted terms.

This is somewhat old news but if you haven't heard the EU has finally gotten fed up with the continued American use of semi-generic terms such as 'Clos', 'Chablis' and 'Vintage'. Last September the EU sent a letter notifying the US that it would not extend the grace period granted for such terms in the 2005 Agreement between the US and the EU regarding the trade in wine. EC Regulation 113/2009 came into effect March 10th, restricting future sales of all US wines using the controverted names to the existing stock on hand. Almost certainly US trade reps are meeting with the EU to work this out as we speak. Er, I speak. Or type.

No wine in NY grocery stores.

A bill proposed to allow sale of wine in New York grocery stores is dead in the water. Originally it was part of a budget fund-raising move, the new license fees would have brought in millions of dollars. However, the bill was shot down by the liquor company lobby and a coalition of police, concerned parents, etc. It's another interesting example of the conflict between the ideals of the prohibition-era laws that set up the NY alcohol trade, and the entrenched power thus vested in the liquor stores. Does restricting wine (which in 1933 America was generally high-strength rotgut, compared to the "refined" table wines of today) sales to liquor stores still serve a temperance goal? Or does it just line the pockets of a protected business? Or both? A good question for any state to ponder, as I believe only 35 states or so allow wine sales in grocery stores.

Beer News

Redhook/Widmer take a hit

Portland's Widmer Brewing turns 25 this year, but also took a serious hit from the recession. The Portland Business Journal reports that the company created by the Redhook/Widmer merger, Craft Brewer's Aliance, lost $30 million last year. The spike in raw materials costs that hit all brewers and the economic downturn seem to be the culprits. On the bright side, they still maintain their distribution agreement with AB/In-Bev (which also owns 1/3 of the CBA) and we've begun to see their Kona brand here in Miami. Anecdotal evidence indicates that it's refreshing and delicious.

It's now legal to homebrew in Utah, Washington getting there.

Utah Senate Bill 187 and House Bill 51 passed, making it legal to homebrew in Utah and revamping the state's alcohol laws.

Washington State Senate Bill 5060 passed the House (90-3) and now goes back to the Senate for concurrence. The bill faced minor amendments involving wording in the House Labor and Commerce Committee. It would still allow removal of up to 20 gallons of homebrewed wine or beer, not for sale, and for private use including at events and competitions.

Beer Wars

Also a 400+ simultaneous theatre showing of the documentary Beer Wars is happening this Thursday, April 16th. I've got my tickets. Expect a review (and about a thousand others on the beer-bloggernets)

Section 2, 21st Amendment

"The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited."